Fiduciary

A fiduciary is any individual or entity that has a legal duty to act in the best interest of another party. In the financial industry, fiduciary advisors must recommend investments and strategies that serve the client's goals rather than those that generate the highest commissions or fees for the advisor.

Not all financial professionals are fiduciaries. Registered Investment Advisors and CFP professionals are held to the fiduciary standard, meaning they must disclose conflicts of interest and always prioritize client interests. Broker-dealers, by contrast, have traditionally been held to a lower suitability standard, which only requires that recommendations be suitable for the client, not necessarily the best option available.

Asking whether an advisor is a fiduciary is one of the most important questions when selecting a financial professional. A fiduciary advisor is required to provide transparent fee disclosure, avoid conflicts of interest, and document the reasoning behind their recommendations. Working with a fiduciary can save investors significant money by ensuring they are not steered into high-fee products that primarily benefit the advisor.